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Here’s how far the Nasdaq could fall if bond yields reach 2%

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In early Friday action, the yield on the 10-year Treasury was rising and Nasdaq 100 futures were falling.

That’s been the pattern over the last month. After a very close connection since the pandemic began, inflation-adjusted yields have kept climbing, but the Nasdaq 100 has suffered. That makes sense given the rich valuation tech stocks enjoy — when safe bonds offer more than crumbs as return, they present an investment alternative to stocks.

So analysts are now modelling just how far techs could fall if bond yields keep rising. Joe Kalish, chief global macro strategist at Ned Davis Research, says the Nasdaq 100 could fall 20% from its peak if the 10-year Treasury reaches 2%. (The index is already down 6% from its peak.)

Kalish’s calculation depends on other relationships holding steady. He says earnings yields and forecasted corporate bond yields have moved in tandem since 2014. A 2% 10-year Treasury would likely cause the bond yields on Baa-related bonds — the lowest investment-grade rating — to reach 4.5%, requiring a 20% drop in the Nasdaq 100 to keep that relationship consistent.

Strategists at French bank Societe Generale tend to agree. They’ve looked at the theoretical impact of a rise in bond yields, at different price-to-equity ratios. Given that the Nasdaq Composite is trading on 31.5 times earnings, according to FactSet data, the chart shows the impact could be steep.

That said, most notable is that Kalish remains bullish on stocks even with those risks. He looked at another measure of valuation, using Census Bureau data on cash-flow margins. “As cash flow has improved since the early 1990s and the cost of capital has fallen with interest rates, the economic margin has risen,” he writes. Right now, that margin is above its 5-year average. In the U.S., the firm is recommending small caps over large caps and value over growth.

The buzz

The $1,400 stimulus checks from the $1.9 trillion relief package signed into law by President Joe Biden could arrive as early as this weekend. Biden set a May 1 target for all adults to be eligible to receive vaccines.

Novavax
NVAX,
+8.77%
will be in the spotlight after the biotech said a completed late-stage clinical study showed that its vaccine candidate was 96.4% effective against “mild, moderate, and severe disease caused by the original COVID-19 strain.” Thailand delayed the rollout of the AstraZeneca
AZN,
-2.29%
vaccine, joining Scandinavian countries including Denmark, over blood clot concerns. Italy reportedly will impose a lockdown over the Easter weekend, according to wire service reports citing a draft decree.

China is planning ways to tame e-commerce giant Alibaba
BABA,
+2.77%,
according to The Wall Street Journal. China also fined 12 tech companies including Baidu
BIDU,
+6.76%
and Tencent
700,
-4.41%
for alleged antitrust violations.

Electronic signature company DocuSign
DOCU,
+5.90%
topped revenue and earnings expectations for its latest quarter and delivered a better-than-expected outlook on those metrics.

Producer price and consumer sentiment data highlight the economics calendar.

The markets

The yield on the 10-year Treasury
TMUBMUSD10Y,
1.594%
rose as high as 1.61% — surprising analysts given the successful auction of bonds of that maturity earlier in the week.

Stock futures
ES00,
-0.29%,
particularly on the Nasdaq 100
NQ00,
-1.30%,
slumped. Gold futures
GC00,
-1.12%
fell by around $20 per ounce.

Random reads

There’s a bull market in twins — with the birth rate up by a third since the 1980s.

Scientists want to send 6.7 million sperm samples to the Moon as a global insurance policy.

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Business

Dow Jones Futures: Nasdaq Leads As Tesla, Nio Soar, But Wait For This; Final Biden Stimulus Vote On Tap

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Dow Jones futures were little changed late Tuesday, along with S&P 500 futures and Nasdaq futures, with the House set to give final passage to the $1.9 trillion Biden stimulus bill. The stock market rally attempt had a strong session Tuesday as Treasury yields backed off. The Dow Jones hit a record high before backing off while the S&P 500 index reclaimed key levels. The Nasdaq rebounded strongly but remains well off recent highs.




X



Likewise, growth names such as Tesla (TSLA), Nio (NIO), Nvidia (NVDA) and Zoom Video Communications (ZM) were big winners Tuesday, but are still in deep downtrends.

New breakouts are coming from real economy names. Specialty chemicals maker Element Solutions (ESI) and auto giant Stellantis (STLA) broke out, while steelmaker Ternium (TX) and auto dealer CarMax (KMX) extended gains within buy zones. Microsoft (MSFT), less of a high-octane, high-value name than Tesla stock, retook a buy point as well as several key levels.

Microsoft and Nvidia stock are on IBD Leaderboard and the IBD 50 list. MSFT stock is on IBD Long-Term Leaders as well. KMX stock was Tuesday’s IBD Stock Of The Day.

Why This IBD Tool Simplifies The Search For Top Stocks

Biden Stimulus Bill Vote

The House is set to give final passage to the $1.9 trillion Biden stimulus bill on Wednesday, voting on the Senate version of the legislation. The Senate passed the Biden stimulus bill, with a few tweaks, on Saturday. After the House vote, the stimulus bill will go to President Biden’s test for his signature.

The stimulus bill will provide $1,400 checks for many Americans, expanded jobless benefits, aid to schools, state and local governments as well as significant spending boosts on anti-poverty programs, ObamaCare and private pension bailouts. It also includes a little money for coronavirus vaccinations and testing.

After the huge Biden stimulus bill — coming weeks after a second coronavirus aid package — congressional Democrats are mulling an even-bigger spending package later this year focused on infrastructure. That latter package also will likely include major tax increases.

The looming spending blitz has buoyed interest rates and real economy stocks, with rising Treasury yields weighing on growth names.

Dow Jones Futures Today

Dow Jones futures were little changed fair value. S&P 500 futures edged lower and Nasdaq 100 futures tilted higher.

The 10-year Treasury yield was at 1.53%, little changed in extended trade.

At 8:30 a.m. ET Wednesday, the Labor Department will release the February consumer price index. The CPI hasn’t moved Dow Jones futures in quite some time, but Treasury markets have been signaling some concern about future inflation.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.

Coronavirus News

Coronavirus cases worldwide reached 118.13 million. Covid-19 deaths topped 2.62 million.

Coronavirus cases in the U.S. have hit 29.79 million, with deaths above 540,000.

Stock Market Tuesday

The stock market rally attempt had a generally encouraging session Tuesday, though the fade into the close wasn’t great. The 10-year Treasury yield fell 6 basis points basis points to 1.53% after climbing for several days. That was a catalyst for growth stocks.

The Dow Jones Industrial Average edged up 0.1% in Tuesday’s stock market trading, fading badly in the final minutes after briefly hitting another record high. The S&P 500 index popped 1.4%, bouncing above its 50-day and 21-day lines. The Russell 2000 climbed 2.1%, above its 21-day.

The Nasdaq composite surged 3.7%, but is still below its 50-day line.

Tesla stock spiked nearly 20%, its biggest percentage gain in 13 months, fueled by the overall growth rally as well as strong China sales. Nio stock leapt 17%. Nvidia jumped 8% and Zoom stock 10%. But all four stocks are still well below their 50-day line and need time to repair their damaged charts. Nvidia stock managed to reclaim its 200-day average while Zoom is still below that.

TSLA stock and Nio did rise modestly overnight.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 4.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained just over 5%, both closing in on their 50-day lines.  The iShares Expanded Tech-Software Sector ETF (IGV) rallied 4.4%, with Microsoft its top holding and ZM stock a notable component. The VanEck Vectors Semiconductor ETF (SMH) jumped 5.9%, with Nvidia a major holding.

Reflecting more-speculative story stocks, Ark Innovation ETF soared 7.65% and Ark Genomics ETF 10.4%, after both took heavy losses in recent days. Tesla stock is the No. 1 holding across in ARK Investments’ ETFs.

Market’s Latest Stock Breakouts Find Three Key Trends

Stocks In Buy Zones

Element Solutions stock rallied 7.2% to 20.24, running past an 18.50 cup-base buy point in heavy volume, according to MarketSmith analysis. The 5% chase zone for ESI stock runs to 20.48. The relative strength line is at a new high, reflecting its outperformance vs. the S&P 500 index. The specialty chemicals maker, touching on electric vehicles, 5G, AI and smartphones, recently reported a 41% EPS gain for the latest quarter.

Stellantis stock climbed 2.6% to 17.56, clearing a 17.31 cup-base entry. Stellantis is the result of a recent merger between Fiat Chrysler and France’s Peugeot. STLA stock has lagged Ford (F), General Motors (GM) and especially Volkswagen (VWAGY), but earnings are rebounding solidly and its RS line is at a new high.

Ternium stock 3.9% to 35.43 above a 34.09 cup-base buy point in heavy volume. TX stock originally broke out on March 2 falling back a few days later. Shares just closed in buy range on Monday, but fell below the entry Tuesday morning before rebounding.

CarMax stock hit 132 intraday but reversed lower to down 0.3% to 128.82, still slightly above the 128.68 buy point. KMX stock jumped 4.85% to 129.17 on Monday. The RS line is at a high. CarMax earnings have rebounded as tight new-car supply fuels used-car sales and prices. The used-car giant also has made a big push into digital sales during the pandemic.

Microsoft stock advanced 2.8% to 233.78, back above a 232.96 buy point. The Dow Jones tech giant also reclaimed its 50-day and 21-day moving averages, as well as breaking a short downtrend. In many ways, MSFT stock chart in the past few weeks looks a lot like the S&P 500 index. Buying Microsoft stock near the 50-day line makes sense as a Long-Term Leader. Investors also could start a stake here, then fill out the position if and when MSFT stock completes and clears a new consolidation starting with the Feb. 16 all-time high of 246.13. The RS line for Microsoft stock has lagged since July and off its early February levels, but has held better than many tech names in the past few weeks.

Stock Market Rally Analysis

Analyzing the current stock market rally attempt is difficult because the major indexes are so split. It’s normal to see one index lead to the upside or downside, but usually they all trend in the same direction. But that hasn’t been the pattern in recent weeks.

On Tuesday, the stock market did rally across the board, barely. The Nasdaq led with a powerful rebound, as Tesla stock and many speculative growth names soared following several down days. The S&P 500 index rose strongly while the Dow Jones eked out a slim gain after a solid intraday gain.

But the Nasdaq and many hot stocks like Nvidia are still below their 50-day lines.  The best one-day gains in history are all in bear markets, so one big day for growth stocks in a correction doesn’t mean much by itself.

Tuesday marked day three of a stock market rally attempt. Especially for the Nasdaq and growth sectors, a follow-through day to confirm the new rally is key. A follow-through could come any day now. A strong Nasdaq gain from these levels also could push the tech-heavy index to or above its 50-day and 21-day lines.

The Dow Jones, despite its lackluster finish, is trading right at record highs. Several more real economy stocks entered buy zones. To be blunt, if the Dow Jones and cyclical sectors embodied the stock market, IBD wouldn’t have declared a correction last week. With the Dow Jones and related sectors at new highs, it’s easy to argue that this major segment of the market is in an uptrend — and never was in a correction.

The S&P 500 index also looks healthier, regaining key levels. So does the Russell 2000.

IBD Stock Of The Day In Buy Range As Earnings Rebound On These Trends

What To Do Now?

Work on your watch lists, focusing on relative strength. But from those stocks with strong RS lines, pay close attention to those that are setting up near buy points.

Investors could choose to take some small positions in stocks breaking out or flashing other buy signals. Aside from a few names such as Microsoft stock, that’s generally going to be real economy names. As for growth stocks, wait for a follow-through day. Even then, many stocks such as Nio, Zoom or Tesla could take weeks or longer to forge new buying opportunities.

This is an important day to read The Big Picture to understand the market direction.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Business

Dow Jones Today Slumps, Nasdaq Dives Ahead Of Powell Testimony; ZoomInfo, Nexstar Jump On Earnings

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Tech stocks led the market into sharp early losses Tuesday, ahead of Senate testimony from Fed Chief Jerome Powell. The $1.9 trillion federal stimulus package moved forward in the House late Monday, helping to lift oil prices and some pandemic reopening plays. Earnings news ignited ZoomInfo, and sent Nexstar Media into a buy range. Meanwhile, Home Depot swung low on the Dow Jones today, following its fourth-quarter report.




X



The Nasdaq Composite unwound 3.5% at the starting bell as Baidu (BIDU) and Tesla (TSLA) dropped more than 11% each at the starting bell. The S&P 500 opened to a 1.4% loss. The Dow industrials shed more than 200 points, down 0.7%. Procter & Gamble (PG) topped the Dow Jones today, rising nearly 3%.

Etsy (ETSY), Tesla and Enphase Energy (ENPH) traded lowest among S&P 500 stocks. CBRE Group (CBRE) and Extra Storage (EXR) led, up more than 5% each on earnings news.

Earnings News: ZoomInfo Spikes, Nexstar Breaks Out

In earnings news, Nexstar Media Group (NXST) and IBD Leaderboard stock ZoomInfo (ZI) rose after reporting results late Monday.

ZoomInfo rallied more than 10% after topping analysts’ fourth-quarter revenue and earnings views late Monday. At least four analysts raised price targets on the stock early Tuesday. Piper Sandler weighed in at the top of the list with a 70 price target.  ZoomInfo stock has been volatile, reversing an 11% advance from a Feb. 3 breakout and diving back below the 53.18 buy point — as well as cutting support at its 21-day exponential moving average on Monday.

Technically, the pullback triggered a sell rule, but it stopped short of setting off the automatic stop-loss rule. Tuesday’s premarket action points to the stock retaking the buy point in early trade, a valid buy opportunity. But investors should be sure to mind the shifting status of the uptrend, especially before diving into volatile young stocks with recent initial public offerings.

Texas-based television broadcaster Nexstar Media Group popped 4.6% after its healthy fourth-quarter report. The move sent shares into a buy range above a 131.10 buy point in a 12-week ascending base. The buy range runs to 137.66.

Dow Jones Today: Home Depot Breaks Support

Home Depot (HD) crumbled 5% on the Dow Jones today, despite reporting a strong fourth-quarter earnings and revenue beat late Monday. The company also increased its quarterly dividend 10%, to $1.65 per share.

IBD Live: A New Tool For Daily Stock Market Analysis

The drop sent Home Depot stock up to cut below its 10-week moving average. The stock has been seesawing above and below the line since August, forming in the process a 26-week flat base. The base has a 293.05 buy point. Shares ended Monday 6% below that entry.

Stimulus Set For House Floor Vote

In Washington, the House Budget Committee passed President Joe Biden’s $1.9 trillion American Rescue Plan Monday after a 19-16 vote, with Republicans opposing the measure. The move sets the package up for a House floor vote later this week. House Democrats are aiming to have the package ready for the president’s signature before current supplemental unemployment benefits expire on March 14.

Federal Reserve Chairman Jerome Powell is due to address the Senate Banking, Housing and Urban Affairs Committee at 10 a.m. ET.

Bonds, Copper Flat; Oil At 13-Month High

Among other U.S. markets, bonds flattened, with the 10-year yield at 1.36%, up sharply from lows around 0.50% in August. Yields had started 2020 at around 1.8%, down from about 2.7% a year earlier.

Oil prices rose, with West Texas Intermediate crude up 0.5% to above $62 a barrel, and at its highest level since Jan. 8, 2020. Europe’s Brent crude benchmark rose to near $66. Copper also paused its rally, with futures trading flat near $4.15 a pound, the highest mark since July 2011.

Stock Market ETF Strategy And How To Invest In The Current Uptrend

Bitcoin Dips Below $46,000

Bitcoin recovered some early losses Tuesday, after sinking below $46,000 to touch its lowest level since Feb. 11, according to CoinDesk. Bitcoin had climbed to a record high above $58,000 on Sunday.

Among Bitcoin-related stocks, Marathon Patent Group (MARA) tanked 15%, while MicroStrategy (MSTR) traded down 7.4%. The Amplify Transformational Data Sharing ETF (BLOK) slumped 10.5%.

Stock Market ETF Strategy And How To Invest In The Current Uptrend

IBD Leaderboard stock PayPal Holdings (PYPL) dropped 6.5%. PayPal stock has felt some influence from Bitcoin price swings since October, when the company launched a cryptocurrency trading service that deals in Bitcoin. The loss points PayPal stock toward a drop below its 21-day moving average, and a possible test of support at its 10-week line.

Coronavirus Update: 41-Day Decline Ends

As the cumulative death toll from the coronavirus pandemic in the U.S. climbed above 500,000 on Monday, the seven-day average for new Covid-19 cases reported daily in the U.S. and worldwide ticked higher for the first time in 41 days. New cases reported worldwide, averaged across the prior seven days, increased to 360,341 on Monday. That is more than 50% below the high of 745,985, recorded on Jan. 11.

In the U.S., the seven-day average for new reported cases rose on Monday to 69,528, still down more than 72% from the peak of 255,258 reached on Jan. 11, according to Worldometer.

Why This IBD Tool Simplifies The Search For Top Stocks

Deaths also ticked higher for a second day. The seven-day average for deaths reported daily rose to 2,042 on Monday. The daily average for deaths reported had fallen for 25 days after hitting a high of 3,447 on Jan. 26.

The Centers for Disease Control and Prevention reports that 75.2 million doses of vaccine have so far been distributed in the U.S. Some 64.177 million doses have been administered, meaning just under 20% of the U.S. population has so far received at least one shot.

Among related stocks, Co-Diagnostics (CODX) and Moderna (MRNA) were taking early hits, down 4.1% and 1.5%, respectively. No clear news was driving the moves.

Dow Jones Today: Salesforce Earnings

IBD Long-Term Leader Salesforce.com (CRM) will be the last regular-season earnings report among Dow Jones stocks. It’s due to report its fourth-quarter earnings after the close on Thursday. Salesforce shares fell 2% in early trade on the Dow Jones today.

Salesforce stock is climbing the right side of a cup base that formed after a failed November breakout from a double-bottom base. MarketSmith puts the buy point at 271.02, and Salesforce shares were about 10% below that mark at the end of trade on Friday.

Find Alan R. Elliott on Twitter @IBD_Aelliott

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Business

UPDATE: Sundial files shelf to issue up to $1 billion in securities over time, regains Nasdaq compliance

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Canadian cannabis company Sundial Growers Inc.
SNDL,
+5.29%
has filed a shelf registration with the Securities and Exchange Commission to issue up to $1 billion of securities over time. Calgary-based Sundial, a now penny stock of a company that once had a valuation of $1 billion, said in early February that it had fully used its previous shelf, after conducting a series of capital raises in recent months. The new shelf allows it to offer common shares, preferred shares, warrants, rights and units. Shares were down 11% premarket, but have gained 363% in the year to date, after the stock became popular with the Reddit investor group that sent shares of videogame retailer GameStop Inc.
GME,
-5.52%
and others to dizzying heights in an effort to create a short squeeze in recent weeks. Separately, Sundial said it had regained compliance with Nasdaq listing rules after its stock closed at $1 or higher for at least 10 consecutive business days. The Cannabis ETF
THCX,
+5.70%
has gained 96% in the year to date, while the S&P 500
SPX,
-0.06%
has gained 16%.

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Business

S&P 500, Nasdaq rally to records as Senate paves way for $1.9T coronavirus relief, unemployment rate falls

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GLJ Research founder and CEO Gordon Johnson and FOX Business’ Charlie Gasparino provide insight into short selling.

U.S. equity markets hit record highs Friday morning after the Senate paved the way for President Biden’s $1.9 trillion COVID-19 aid package and the jobs report showed a drop in the unemployment rate.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 31183.41 +127.55 +0.41%
SP500 S&P 500 3887.47 +15.73 +0.41%
I:COMP NASDAQ COMPOSITE INDEX 13812.479301 +34.74 +0.25%

The Dow Jones Industrial Average climbed 170 points, or 0.55%, while the S&P 500 and the Nasdaq Composite advanced 0.48% and 0.29%, respectively. Both the S&P 500 and the Nasdaq Composite were trading in record territory while the Dow was just below its own peak.

Also lending support to equities, a boost in West Texas Intermediate oil prices which topped $57 per barrel Friday giving energy stocks a lift.

Ticker Security Last Change Change %
USO UNITED STATES OIL FUND L.P. 38.21 +0.40 +1.06%
XLE ENERGY SELECT SECTOR SPDR ETF 42.90 +0.70 +1.65%

Stocks rose despite a ho-hum jobs report with the addition of 49,000 jobs in January as the unemployment rate fell to 6.3%, according to the Labor Department. Wall Street analysts surveyed by Refinitiv had expected the addition of 50,000 jobs with the unemployment rate holding steady at 6.7%.

In Washington, the upper chamber of Congress early Friday morning voted 51-50, with Vice President Kamala Harris casting the tie-breaking vote, to adopt a budget resolution for coronavirus relief. The vote paves the way for a bill to pass using budget reconciliation rules that would allow Democrats to avoid a Republican filibuster.

CLICK HERE TO READ MORE ON FOX BUSINESS

In stocks, GameStop Corp., AMC Entertainment Holdings Inc. and others received a reprieve after Robinhood Markets Inc. lifted all trading restrictions that had been implemented amid a surge in volatility. GameStop shares had plunged 84% this week through Thursday while AMC shares were down 47%.

Ticker Security Last Change Change %
GME GAMESTOP CORP 70.06 +16.70 +31.30%
AMC AMC ENTERTAINMENT HOLDINGS INC 7.30 +0.21 +2.96%
BBBY BED BATH & BEYOND INC. 27.41 +0.40 +1.48%
BB BLACKBERRY LIMITED 12.73 +0.56 +4.62%

Elsewhere, Chevron Corp. made an offer to buy the remaining shares of Noble Midstream L.P. that it doesn’t already own for $12.47 apiece, the same as Thursday’s closing level. The deal, which must be approved by Noble’s board, values the company at $1.13 billion.

Ticker Security Last Change Change %
CVX CHEVRON CORP. 89.62 +0.56 +0.63%
XOM EXXON MOBIL CORPORATION 49.95 +1.62 +3.36%

In earnings, Ford Motor Co. lost $2.8 billion in the three months through December as an airbag recall and idled production of its F-150 pickup truck weighed on the company’s bottom line. The Detroit-based automaker said through 2025 it will spend $22 billion on electric vehicles and another $7 billion to develop autonomous vehicles.

Ticker Security Last Change Change %
F FORD MOTOR COMPANY 11.57 +0.20 +1.71%

Peloton Interactive Inc. reported record quarterly revenue and raised its full-year outlook, but warned recent upgrades to its supply chain would have a near-term impact on margins.

Ticker Security Last Change Change %
PTON PELOTON INTERACTIVE 144.02 -13.51 -8.58%

Snap Inc. said its number of daily active users rose 22% from a year ago, but warned the Capitol Hill riots and Apple’s privacy changes to its operating system would weigh on results in the current quarter.

Ticker Security Last Change Change %
SNAP SNAP INC. 59.86 +1.53 +2.62%

In commodities, gold added $4.50 to $1,795.70 per ounce.

BITCOIN ROBS FROM GOLD AS PRECIOUS METAL SINKS BELOW $1,800

Overseas markets were mostly higher.

France’s CAC 40 was pacing the advance in Europe, trading up 0.98%, while Germany’s DAX 30 held a more modest gain of 0.2% and Britain’s FTSE 100 was little changed.

In Asia, Japan’s Nikkei 225 rallied 1.54%, Hong Kong’s Hang Seng index advanced 0.6% and China’s Shanghai Composite slipped 0.16%.

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Business

GameStop, Microsoft, AMC: What to Watch When the Stock Market Opens Today

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Here’s what we’re watching ahead of Wednesday’s opening bell.

—U.S. stock futures slipped, as investors awaited a bumper day of major earnings reports and a meeting of the Federal Reserve.

S&P 500 futures were down 1.1%, while futures tied to the technology-heavy Nasdaq-100 edged down 0.7%. Dow Jones Industrial Average futures fell 1.1%.

What’s Coming Up

—Earnings updates expected:

Tesla,

TSLA -0.71%

Apple

AAPL -0.22%

and

Facebook

FB -2.39%

are due after the close. The electric-car maker is expected to record its first full-year profit.

The Federal Reserve releases a policy statement at 2 p.m. and Chairman Jerome Powell holds a press conference at 2:30 p.m.

Market Movers to Watch

—And then there’s GameStop. Its stock popped again ahead of the bell, soaring 73% in wildly volatile trading. CNBC reported that Melvin Capital, a hedge fund that has posted big losses so far this year in part because of a wager against the videogame retailer’s stock, had closed out its short position on Tuesday afternoon. The report caused a stir on the online platform Reddit—popular among day traders waging a battle against hedge-fund short-sellers—where some members wrote that it was an attempt to pull

GameStop

GME 109.79%

‘s share price back down. And

Elon Musk

weighed in on the stock again last night with a tweet, “Gamestonk!!“

—The show must go on: Another heavily shorted stock, movie-theater operator

AMC Entertainment Holdings,

AMC 133.87%

saw its shares vault more than 350% higher premarket.

—Headphone maker

Koss

KOSS 72.20%

has also joined the party, and its shares jumped 109% premarket.

—

Bed Bath & Beyond

BBBY 28.21%

resumed its upward trajectory, up 20% ahead of the bell. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase.

—

Microsoft

MSFT 1.44%

shares are up 2.1% premarket. The software giant’s profit and sales jumped, propelled by pandemic-fueled demand for videogaming and accelerated adoption of its cloud-computing services.

—

Boeing

BA -4.46%

shares fell 3.3% premarket after the plane maker reported its biggest-ever annual loss and took a huge financial hit on its new 777X jetliner, reflecting the pandemic’s worsening toll.

—

Abbott Laboratories

ABT 1.12%

shares added 1.5% premarket after it logged hearty profit growth in the latest quarter as a surge in demand for its Covid-19 diagnostics services contributed to higher revenue.

—

Starbucks

SBUX -5.30%

slipped 3% premarket after the coffee chain reported that sales fell during the holiday quarter but showed signs of recovery, particularly in China. Its operating chief

Roz Brewer

is leaving to become CEO of

Walgreens

WBA 6.21%

Boots Alliance, where she’ll be the only Black woman leading a Fortune 500 company. Walgreens shares climbed 5%.

A Walgreens store in Tomball, Texas, Jan. 16, 2021.



Photo:

Jeff Lautenberger for The Wall Street Journal

—

AT&T

T -1.11%

shares slipped 1.3% premarket after it reported a fourth-quarter loss as it booked a $15.5 billion charge on its pay-TV business.

—Chip maker

Texas Instruments

TXN -2.81%

‘s shares slipped 1.7% premarket even though quarterly results and outlook both topped Wall Street estimates after Tuesday’s close.

Market Fact

Retail order flows have reached 20% of the U.S. stock market’s total, according to

UBS

research, twice what they were in 2010.

Chart of the Day

GameStop shares have become a favorite of online traders who are seeking to make money from buying options.

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Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



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Microsoft, BlackBerry, GE, Leon Black – 5 Things You Must Know

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Here are five things you must know for Tuesday, Jan. 26:

1. — Stock Futures Move Higher on Solid Earnings

Stock futures moved mostly higher Tuesday following solid earnings reports from Johnson & Johnson  (JNJ) – Get Report, 3M  (MMM) – Get Report and General Electric  (GE) – Get Report.

Equities had wavered for most of the premarket session on the possibility that a U.S. coronavirus relief package could be delayed. 

Contracts linked to the Dow Jones Industrial Average rose 56 points, S&P 500 futures rose 2 points and Nasdaq futures were down 7 points ahead of earnings reports from some of the biggest tech companies.

Senate Majority Leader Chuck Schumer said Monday an aid package was unlikely before mid-March. That is when federal unemployment benefits authorized by last $900 billion package will expire.

President Joe Biden said he was open to negotiations on his proposed $1.9 trillion plan to send $1,400 to most Americans and deliver other support for the economy, including funds for vaccine distribution.

A bipartisan group of senators already have voiced opposition to the size of Biden’s plan.

The coronavirus pandemic, meanwhile, has killed more than 421,000 in the U.S. and concerns have been growing about the bumpy rollout of vaccines in the country. Biden said he anticipates vaccines will be available to anyone in the U.S. by spring, but to meet that projection vaccine makers will have to sharply increase production.

Stocks finished mixed on Monday amid questions about whether the Biden White House will be able to deliver another round of stimulus. The S&P 500 and Nasdaq, however, did manage to close at record highs.

2. — Tuesday’s Calendar: Microsoft and AMD Earnings, Federal Reserve Meeting

General Electric  (GE) – Get Report reported fourth-quarter adjusted earnings of 8 cents a share, 1 cent below analysts’ estimates. Total revenue of $21.93 billion topped forecasts.

Johnson & Johnson  (JNJ) – Get Report posted stronger-than-expected fourth- quarter earnings and said Tuesday it would provide an update on its vaccine development progress “soon.”

“We continue to progress our Covid-19 vaccine candidate and look forward to sharing details from our Phase 3 study soon. Johnson & Johnson was built for times like these, and I am extremely confident in our ability to deliver lasting value and continued innovation in 2021 and for years to come,” said CEO Alex Gorsky.

Earnings reports are also expected Tuesday from Microsoft  (MSFT) – Get Report, Advanced Micro Devices  (AMD) – Get Report, Starbucks  (SBUX) – Get Report, Verizon  (VZ) – Get Report, Lockheed Martin  (LMT) – Get Report, American Express  (AXP) – Get Report, 3M  (MMM) – Get Report, Xilinx  (XLNX) – Get Report, Raytheon Technologies  (RTX) – Get Report and Texas Instruments  (TXN) – Get Report.

Microsoft, Advanced Micro Devices and Starbucks are holdings in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

The U.S. economic calendar on Tuesday includes the first day of a two-day meeting of the Federal Reserve. The central bank isn’t expected to move on interest rates and has signaled it will keep them near zero through 2023.

Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, said the central bank likely will reiterate its “commitment to prolonged monetary accommodation” at the meeting.

“Uncertainty surrounding the pandemic’s near-term course and signs of weakening labor markets suggest recent taper talk by Fed officials is still premature,” Heppenstall added, referring to when the Fed might  begin tapering asset purchases.

The calendar also includes the Case-Shiller Home Price Index for November at 9 a.m. ET and Consumer Confidence for January at 10 a.m.

3. — Leon Black Will Step Down as CEO of Private-Equity Giant Apollo

Leon Black, the founder and CEO of private-equity giant Apollo Global Management  (APO) – Get Report, will step down as chief executive after it was revealed he made larger-than-expected payments to Jeffrey Epstein, the disgraced financier.

Black paid Epstein $158 million in fees for trust- and estate-tax planning in the five years to 2017, far more than was previously known, according to a report from law firm Dechert. 

The review by Dechert found no evidence that Black was involved in the criminal activities of the late Epstein, who was indicted in 2019 on federal sex-trafficking charges involving underage girls. Epstein committed suicide in prison while awaiting child sex charges.

Apollo also never retained Epstein for any services, the report concluded. 

Black wrote in a letter to Apollo’s fund investors that he would cede the role of CEO to co-founder Marc Rowan on or before his 70th birthday on July 31, while retaining the role of chairman. 

The Wall Street Journal was first to report on the contents of the report and letter.

Shares of Apollo Global rose 3.86% to $47.65 in after-hours trading on Monday.

4. — BlackBerry Shares Surge Again

BlackBerry  (BB) – Get Report was jumping more than 11% in premarket trading Tuesday, following the stock’s more than 28% gain in the previous session as it received a boost from retail traders and was being heavily mentioned on online message boards such as Reddit.

BlackBerry, the security software and services company, said in a statement that it was unaware of reasons for the stock move.

Shares of BlackBerry rose 11.87% to $20.17 in premarket trading Tuesday. The stock has gained 172% so far in 2021.

BlackBerry Rises Again, Gets Lift From Expanded Baidu Partnership

Analysts at RBC cut the stock to underperform from sector perform, citing valuation and saying there has been no change to the company’s fundamental outlook. Analyst Paul Treiber maintained his price target at $7.50.

BlackBerry has become a favorite on the Reddit message board, much like GameStop  (GME) – Get Report and Express  (EXPR) – Get Report.

What Is Happening to GameStop Stock? Jim Cramer Explains

5. — Apple Lead Hardware Engineer Shifting to ‘New Project’

Apple  (AAPL) – Get Report said its leading hardware engineer, Dan Riccio, was moving to a new project and will be replaced by John Ternus, currently a vice president of hardware engineering.

Riccio has been with Apple since 1998 and has worked on most of the company’s major products over that time, from the first iMac computers to the latest 5G phones.

Apple didn’t specify what project Riccio will lead. But recent speculation has focused on efforts by the company to develop a high-end virtual reality headset, or augmented reality glasses.

Apple is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.



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